Davis Index: Market Intelligence for the Global Metals and Recycled Materials Markets

Credit rating agency Crisil has revised its outlook for Jindal Steel and Power Limited (JSPL) from “positive” to “under watch with negative implications”. Crisil has maintained a BBB rating for JSPL’s long-term credit facilities and an A3+ rating for the short term.


With this rating revision, JSPL’s bank facilities and non-convertible debentures (NCDs) are placed under “watch with negative implications”. The downgrade in the rating outlook is due to the increased risk to liquidity, if JSPL is unable to negotiate a moratorium on debt repayment with lenders of its subsidiaries, including Jindal Steel and Power, Mauritius, (JSPML with a debt of $765mn) and Jindal Steel and Power (Australia).


JSPML has failed to service a debt repayment on March 31, 2020, due to delays in the company’s refinancing plans amid disruptions in the financial markets caused by the COVID-19 pandemic and inability of the parent firm to support its debt servicing obligations. 

JSPL has requested for a moratorium on debt repayment with the lenders to, and investors in JSPML and JSPAL. 


Although JSPL has improved its liquidity through advance export deals and borrowings, an adverse outcome from discussions with JSPML and JSPAL lenders can damage its credit portfolio. JSPL has sought a moratorium on loan repayment from its domestic lenders according to the relief measures announced by India’s central bank (Reserve Bank of India) and to avail of concessions for instalments and interest payable on March 31, 2020. 


India’s 21-day nation-wide lockdown has impacted the domestic demand of long steel as construction activities were halted and demand from real estate dipped. Restrictions on road transportation and overall slow capital spending is expected to lower domestic demand, according to Crisil. 

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